HEAD OFFICE, FINANCE DIVISION SECTOR – 10, DWARKA, NEW DELHI EMAIL:finbs6@pnb.co.

in

FD: Circular
No. 33/2017

Dated: 08.12.2017
TO ALL BRANCHES/OFFICES

FINANCE DIVISION CIRCULAR NO.FD/33/2017

FINALIZATION OF ACCOUNTS FOR THE PERIOD ENDING DECEMBER, 2017

1. Finalization of Balance Sheet for the period ending December, 2017 will
continue to be done at the centralized level.

I. Balance Sheet, though, is not being finalized at the Circle level, however it is
imperative that branches/offices should extend full support and respond to their
respective circle office (CO) expeditiously and CO should respond to Zonal Office
(ZO)/ Head Office (HO), to ensure smooth and timely preparation of the Balance
Sheet at Head Office.

II. Time Schedule

Sr. No. PARTICULARS Latest By

i Availability of Loan Returns to Branch Offices /CO 05.01.2018
(Annexure-E, Basel-II & Basel-III Master Summary-
with un-drawn portion).
ii Submission of Concurrent Auditors' Certificate- 08.01.2018
Annexure CA1, MOC-IEAL, MOC- LOANs (fund based
& non-fund based) - digitally signed, jointly by the
Concurrent Auditors and Branch Heads in CBPMS.
(Only branches under concurrent audit to submit
these certificates).

2. The guidelines for finalizing the accounts for the period ending December, 2017
are appended, in addition to the detailed instructions provided in the Manual for
finalization of annual accounts (March 2017 edition). All branches/offices must
ensure strict compliance of guidelines and timelines.

P. K. Sharma
General Manager
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 Guidelines for finalizing the accounts for the period ending December, 2017

1. Latest Changes

1.1 Please refer following IRMD circulars for the updated guidelines on capital
adequacy:

Sl. Circular Date Contents

No. No.
1. IRMD 31/05/2017 Review of Prudential Norms –Risk Weights for
12/2017 Exposures to Corporates, AFCs and NBFC-
IFCs.

2. IRMD Individual Housing Loans- Rationalization of

13/06/2017
14/2017 Risk Weights and LTV ratios
3. IRMD Approval of use of credit ratings of M/S
16/2017 06/07/2017 INFOMERICS VALUATION AND RATING
PVT. LTD. (INFOMERICS)
4. IRMD 25/09/2017 Feeding external risk rating in CBS
20/2017

1.2 Please refer Printing and Stationery Division circular letter No. 03/2017 dated
03.10.2017 for the updated guidelines regarding change in procedure of supply
and recovery of cost of security forms, PNB Forms and stationery items etc. with
the implementation of GST. The revised gudilines are as under:

Ø All the invoices generated by Printing & Stationery Dept. up to the quarter, be
paid before the end of quarter. In case payment not being done to Printing &
Stationery Dept, the respective Circles to make provision for the expenditure at
their end.
1.3 Please refer Credit Card Division circular No.12/2016 dated 29.11.2016 for the
revised guidelines on Credit Card Account. As per revised guidelines, a Credit
Card Account will be treated as Non-Performing Asset if the minimum amount
due, as mentioned in the statement, is not paid fully within 90 days from the
payment due date as mentioned in the statement.

2. GUIDELINES

2.1 All the MOCs & other statements will continue to be signed digitally in CBPMS,
as done during annual closing of 2016-17.

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2.2 For the period December 2017, the bifurcation of signing and verification of the
MOCs (Loan) will be as under:

Ø MOC (Loan) up to `10.00 Lac will be signed by Branch Manager &

Auditor.
Ø MOC (Loan) for more than ` 10.00 Lac and upto ` 2 crore will be signed
by Branch Manager & Auditor and will be verified by Executive Incharge at
CO.
Ø MOC (Loan) for more than ` 2 crore and upto ` 5 crore will be signed by
Branch Manager & Auditor and will be verified by Circle Head at CO.
Ø MOC (Loan) for more than ` 5 crore will be signed by Branch Manager &
Auditor and will be verified by GM/DGM at respective ZO.

Loans MOCs are required to be verified immediately once the Branches are
digitally signed in CBPMS.

2.3 CBPMS (Centralized Balance Sheet and Profit & Loss Management System)
developed by the Finance Division for posting of MOCs (Balance Sheet / P&L /
Loan) by the branches (suggested by the Concurrent Auditors/CO) shall be
available for December 2017 quarter also as in previous quarters.

2.4 The CBPMS Software facilitates the branches under concurrent audit to post the
MOCs, electronically, which can be simultaneously viewed by the HO, ZO & CO.
This expedites incorporation of changes in the final Balance Sheet of the Bank.
In addition to posting of MOCs, the Certificate to be signed by the Concurrent
Auditors-CA-1 is also available in CBPMS.
For December 2017, printout of MOCs from CBPMS will be taken out for the
signatures of the Concurrent Auditor & Branch Head and shall be kept at branch
only. As these MOCs will be digitally signed by the Branch Heads and
Concurrent Auditors, there is no need to send hard copy to HO, ZO and CO.
EVEN IN CASE OF NO CHANGES, "NIL" MOC-IEAL & LOANS will be
generated by the branches from CBPMS.

2.5 All branches under concurrent audit as on 31.12.2017, will also submit the
following returns/information, duly signed by their Branch Heads and
Concurrent Auditors (SCAs in case of top 21 branches):

S. No. Format / Particulars

TO BE SUBMITTED IN CBPMS (DIGITALLY SIGNED)

a) Annexure CA-1- Certificate to be generated through CBPMS.

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 b) MOC-IEAL-Statement of changes suggested by the Concurrent Auditors
related to P & L and B. Sheet Heads, to be generated through CBPMS.

c) MOC-LOANS (both fund based and non-fund based)-Statement of

changes suggested by Concurrent Auditors related to Loans &
Advances, to be generated through CBPMS.
TO BE SUBMITTED TO CO
a) Any statement, if required by any other HO Division

2.6 TOP 21 BRANCHES- REVIEW BY THE SCAs

Statutory Central Auditor will sign the following statements / certificates / reports /
MOCs:

I. RWA Master Summary of advances -Basel-III (with unavailed portion)

AND Annexure-E- Loan & Advances generated through Ladder (1 set for
the branch and 1 set for the SCA).
II. Review Report of the branch (1 set for the branch, 1 set for the SCA AND
1 set to be submitted to Finance Division).
III. MOC-IEAL and MOC-LOANS (Fund based & Non-fund based) Generated
from CBPMS (1 set for the branch, 1 set for the SCA AND 1 set to be
submitted to Finance Division).

2.7 For any other additional statement/returns, branches/CO to follow the guidelines
circulated by the respective HO Divisions e.g:

· Restructured accounts under, CDR, Non-CDR, DRM- SME, Provision for

FITL A/Cs-CD (IRD) and MSME.
· Advances to Sensitive Sector- CD (O).
· Business line-wise statement-ORMD.
· Statement of Contingent Liability- LAW DIVISION.
· Information related to Fraud Accounts-FRMD.
The above list is illustrative and not exhaustive in nature.

2.8 Instructions for the Concurrent Auditors (Internal & External) including that
of top 21 branches under review by SCAs

Correctness of all the closing returns including Annexure-E, Capital Adequacy

Statement (RWA Master Summary of advances) as per Basel-III norms must
be ensured by the Auditors. In this connection, Concurrent Auditors of the
branches will be required to give Review Report as per Annexure CA-1,
generated through CBPMS.

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 In case Concurrent Auditors find some discrepancies during their checking,
which cannot be corrected in the return itself or suggest some changes, the
same are to be POSTED in CBPMS through MOC-IEAL & MOC-LOANS (both
fund based and non-fund based). These changes will be posted in the CBPMS
and hard copy will be generated, to be jointly signed by the Concurrent Auditor
and the Branch Head. In case No change is suggested by Concurrent Auditor,
NIL Statement of Changes generated through CBPMS, digitally signed by
him/her and Branch Head of the branch must be submitted by 08.01.2018.
All Concurrent Auditors must ensure that all the statements (mentioned in
the Table given in Para 2.5 of this circular), jointly signed by the Branch
Head and concurrent auditor are submitted in CBPMS, positively by
08.01.2018.

2.9 MOCs – Procedure

There is no change in the existing system of suggesting the MOCs by the

concurrent auditors e.g

I. Minimum amount for suggesting the MOCs will continue to be more than
` 10000/- per entry for December closing.
II. The said restriction (suggesting MOCs for more than ` 10000/- per
entry) will not be applicable in the following cases:

(i) If nil balance is required against a particular head.

(ii) If there is some mismatch in some heads e.g Code 42041
(Sundries Provision-Provision for expenses paid through
Suspense) and 63563 (Suspense-Items against which
provision is lying in Sundries).
(iii) In case there is a change affecting the Loans & Advances portfolio
of a branch, e.g. change in:
· Gross outstanding
· Asset classification
· NPA provision
· Security (Primary/Collateral) available in an account etc.

(iv) For rectification of any discrepancy/correction of mistake/revenue

leakage branches/offices will continue to correct their records by
passing necessary entries upto ` 10000/- also e.g

· Processing fee or some other charges not recovered from

the borrower.
· Passing of vouchers related to reversal of un-realized
interest and crediting the same to the respective loan
accounts.

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 · Provision required to be made for some items of expenditure
nature.
· Recovery of incidental charges in a deposit account.
· Interest failure in loan/deposit account.
· Non-booking of expenditure as per bank’s extant guidelines.

The list given above is illustrative only.

Concurrent Auditors / Statutory Auditors / CO will not suggest any change (to the
Finance Division) of single entry upto ` 10000/- through MOCs but they will
continue to point out the mistakes for amount upto ` 10000/- and get them
rectified, so that books of accounts at the branches/offices are corrected.

2.10 THIRD DESPATCH

Third Dispatch returns relating to ALM (Maturity Pattern) are NOT REQUIRED.
However for additional information required for “Notes on Accounts” (Schedule
18 of Balance Sheet) & for other statutory requirements, some Divisions of HO
may call certain information directly from CO/Branches/Other Offices, for which,
these Divisions will be issuing separate guidelines.

3. OTHER GUIDELINES

I. It must be ensured that claims received from DICGC as per CBS are
matching with LADDER outstanding of that branch.

II. Branches should ensure the premium relating to ECGC and commission
earned on ECGC loan is booked as per the guidelines.

III. It must be ensured that the Gross Advances as per CBS are matching with
LADDER outstanding of that branch.

IV. Branches to ensure that all advances are categorized either under retail or
corporate category.

V. Branches to ensure that the head “Rebate interest (unexpired discount) code
No. 42253” is tallied with details of bills discounted.

VI. Window dressing of Deposits and Advances - Please refer the instructions
reiterated in Inspection and Audit Division Circular 13/2015 dated 24.08.2015.

VII. Adequate provision be made in respect of all expenses at the branch level
which become due for payment but not paid by 31.12.2017 e.g. telephone,
electricity bills, water charges, rent, publicity & fee/TA DA of Statutory
Auditors. Provisions of Fee/TA DA of Statutory Auditors at circle offices.

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VIII. Items of expenditure nature, which are outstanding in suspense account, be
provided for at the branch level.

IX. Existing entries outstanding in sundry provision be reviewed and if necessary,

reversed.
X. All income & expenditure vouchers for the period ending 31.12.2017 should
be passed on or before 29th December, 2017.

XI. All branches should generate “Interest Failure Report” and ensure that
interest has been properly accounted for, in all accounts. This will be the
responsibility of the Branch Head of the branch.

XII. Branches should calculate and ensure that Cost of Deposits and Yield on
Advances of the branch match with the profile of their business i.e. deposits &
advances. Cost of Deposits & Yield on Advances should be cross-checked
with the previous figures and list out reasons for any major variation.

XIII. Entries relating to Remittance in Transit, Imprest account and Inter-

branch clearing account should be adjusted by timely follow up and
reconciliation. No RIT should be outstanding at year/quarter end.

XIV. Branch Heads / Concurrent Auditors should ensure that all identified
discrepancies are rectified in the system before quarter end and Avoid
MOCs. Branches should make rectification / correction in the Weekly /
Revenue heads before the quarter end i.e. 31st December 2017.

XV. VALIDATION OF DATA - Every month Balance sheet and Profit & Loss data
for last working day is provided to Circles from Finance Division along with
discrepancies list for validation. Circles in turn follow up with the branches for
the rectification of these entries. Checking and Rectification of errors (like
wrong head debited, credit balance in revenue heads etc.) should be an
ongoing exercise at branch level. Branches should make correction in the
system regularly and avoid passing of MOCs due to these reasons.
Concurrent Auditors should ensure rectification of these errors. Zonal Audit
Offices should ensure that Concurrent Auditors are getting the rectification
done by the branches before the closing date and no MOC is passed for such
discrepancies. ITD has made a report PNBREP 10/39 available in the MIS
server of CBS for checking the discrepancies of Balance Sheet and Revenue.
Branches have been instructed to take out the report themselves and make
the required corrections in the system. Circle offices have also been
instructed to generate the report every fortnight for branches under their
jurisdiction and take necessary action for rectification of errors. Zonal audit
offices have also been instructed to generate report for all the branches in
circles under their jurisdiction and ensure that all errors are rectified on
monthly basis.

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4. IMPORTANT TEST CHECKS

I. Gross outstanding as per Annexure-E (generated through Ladder) =

Balance Sheet Codes 62599 (Advances) + 62620 (Non-Performing
Assets).
II. Total non-fund based outstanding as per Annexure-III (generated through
Ladder) = Balance Sheet Code 45199 (Total Acceptance and
Endorsement).
III. Gross NPA i.e. Gross Outstanding less Standard Advances, as per
Annexure-E (generated through Ladder) = Balance Sheet Code No. 62620
(Non- Performing Assets).

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